Liar's Poker Quotes

Those who know don't tell and those who tell don't know.

The men on the trading floor may not have been to school, but they have Ph.D.’s in man’s ignorance.

He was blessed with an unconventional mind, which overcame his conventional middle-class upbringing.

In the land of the blind the one-eyed man is king

Warren Buffett is fond of saying that any player unaware of the fool in the market probably is the fool in the market.

What is "poker"? A card game where abler liars take money off less able liars.

I thought instead of a good rule for survival on Wall Street: Never agree to anything proposed on someone else's boat or you'll regret in in the morning.

The first thing you learn on the trading floor is that when large numbers of people are after the same commodity, be it a stock, a bond, or a job, the commodity quickly becomes overvalued.

Risk, I had learned, was a commodity in itself.

What Gutfreund said has become a legend at Salomon Brothers and a visceral part of its corporate identity. He said: “One hand, one million dollars, no tears.

why they studied economics, and they’d explain that it was the most practical course of study, even while they spent their time drawing funny little graphs.

But everyone wanted to be a Big Swinging Dick, even the women. Big Swinging Dickettes.

If there was a single lesson I took away from Salomon Brothers, it is that rarely do all parties win. The nature of the game is zero sum. A dollar out of my customer’s pocket was a dollar in ours, and vice versa.

I’m now convinced that the worst thing a man can do with a telephone without breaking the law is to call someone he doesn’t know and try to sell that person something he doesn’t want.

You want loyalty, hire a cocker spaniel.

The supreme art of war is to subdue the enemy without fighting. —Sun-tzu

Foolish names and foolish faces often appear in public places.

The Piranha didn’t talk like a person. He said things like “If you fuckin’ buy this bond in a fuckin’ trade, you’re fuckin’ fucked.” And “If you don’t pay fuckin’ attention to the fuckin’ two-year, you get your fuckin’ face ripped off.” Noun, verb, adjective: fucker, fuck, fucking. No part of speech was spared. His world was filled with copulating inanimate objects and people getting their faces ripped off.

It’s taboo,” he said. “When they ask you why you want to be an investment banker, you’re supposed to talk about the challenges, and the thrill of doing deals, and the excitement of working with such high-calibre people, but never, ever mention money.

Donnie Green himself had been a trader at Salomon Brothers in the dark ages, when traders had more hair on their chests than on their heads.

The only thing history teaches us, a wise man once said, is that history doesn’t teach us anything.

It said something about the ability of the free marketplace to mold people’s behavior into a socially acceptable pattern. For this was capitalism at its most raw, and it was self-destructive.

What was the secret to dealing with the assholes? “Lift weights or learn karate,” said O’Grady.

The game has some of the feel of trading, just as jousting has some of the feel of war.

It was striking how little control we had of events, particularly in view of how assiduously we cultivated the appearance of being in charge by smoking big cigars and saying fuck all the time.

Making profits on Wall Street is a bit like eating the stuffing from a turkey. Some higher authority must first put the stuffing into the turkey. The turkey was stuffed more generously in the 1980s than ever before.

Men in general judge more by the sense of sight than by the sense of touch, because everyone can see but only a few can test by feeling. Everyone sees what you seem to be, few know what you really are; and those few do not dare take a stand against the general opinion. —Niccolò Machiavelli, The Prince

The best decisions he has made in his life, he said, were completely unexpected, the ones that cut against convention. Then he went even further. He said that every decision he has forced himself to make because it was unexpected has been a good one.

Corporate finance, which services the corporations and governments that borrow money, and that are known as “clients,” is, by comparison, a refined and unworldly place. Because they don’t risk money, corporate financiers are considered wimps by traders.

What do you mean there is no bathrobe in my suite??!!

Those who say don’t know, and those who know don’t say.

some broker somewhere took out a handsome fee for himself, without necessarily doing much work.

Meriwether spent his entire day avoiding dumb bets, and he wasn’t about to accept this one.

Debt ownership in a shaky enterprise means control, for when a company fails to meet its interest payments, a bondholder can foreclose and liquidate the company.

This conceit went hand in glove with the investment bankers’ belief that they could control their destiny, which, as we shall see, they couldn’t.

A man who can tell a good story can make a good living as a broker.

I set out to write this book only because I thought it would be better to tell the story than to go on living the story.

The larger the number of people involved, the easier it was for them to delude themselves that what they were doing must be smart.

Best of all, he gave us a rule of thumb about information in the markets that I later found useful: “Those who say don’t know, and those who know don’t say.

The astute investor Warren Buffett is fond of saying that any player unaware of the fool in the market probably is the fool in the market.

Had Volcker never pushed through his radical change in policy, the world would be many bond traders and one memoir the poorer.

What is “poker”? A card game where abler liars take money off less able liars.

A big bonus was about as well concealed on the Salomon Brothers trading floor as the results of a hot date in a high school boys’ locker room.

I have this theory," says Andy Stone, seated in his office at Prudential-Bache Securities. "Wall Street makes its best producers into managers. The reward for being a good producer is to be made a manager. The best producers are cutthroat, competitive, and often neurotic and paranoid. You turn those people into managers, and they go after each other. They no longer have the outlet for their instincts that producing gave them. They usually aren't well suited to be managers. Half of them get thrown out because they are bad. Another quarter get muscled out because of politics. The guys left behind are just the most ruthless of the bunch. That's why there are cycles on Wall Street—why Salomon Brothers is getting crunched now—because the ruthless people are bad for the business but can only be washed out by proven failure.

That was somewhere near the middle of a modern gold rush. Never before have so many unskilled twenty-four-year-olds made so much money in so little time as we did this decade in New York and London.

There was one sure way, and only one sure way, to get ahead, and everyone with eyes in 1982 saw it: Major in economics; use your economics degree to get an analyst job on Wall Street; use your analyst job to get into the Harvard or Stanford Business School; and worry about the rest of your life later. So,

The difference between Strauss and Ranieri?” says one trader still at Salomon. “That’s easy. Strauss wouldn’t stoop to use the men’s room on the trading floor. He’d go upstairs. Lewie would piss on your desk.

The final two words of his challenge, “no tears”, meant that the loser was expected to suffer a great deal of pain, but wasn’t entitled to whine, bitch or moan about it. He’d just have to hunker down and keep his poverty to himself.

Before Volcker’s speech, bonds had been conservative investments, into which investors put their savings when they didn’t fancy a gamble in the stock market. After Volcker’s speech, bonds became objects of speculation, a means of creating wealth rather than merely storing it.

The game had a powerful meaning for traders. People like John Meriwether believed that Liar’s Poker had a lot in common with bond trading. It tested a trader’s character. It honed a trader’s instincts. A good player made a good trader, and vice versa. We all understood it. The

RULES OF LYING: 1. Figure out your lie before you open your mouth. 2. Play on your opponent's sympathies and weaknesses 3. Dance around the lie with distracting truth. They're far more convincing. 4. Picture the lie in your head as if it were the truth. They want to see how it's coming up. 5. Never forget which is the lie and which is the truth. 6. If you say something that brings you trouble, pretend that was actually the lie. Lie and say you were joking before, and aren't you funny? It's a quick escape from a sticky situation. It's the liars trapdoor. 7. Avoid it if at all possible. 8. Keep up your poker face. Never have a "tell" or a physical gesture that will give yourself away and let your opponent know your bluffing.

Why did investment banking pay so many people with so little experience so much money? Answer: When attached to a telephone, they could produce even more money. How could they produce money without experience? Answer: Producing in an investment bank was less a matter of skill and more a matter of intangibles—flair, persistence, and luck.

If you are a self-possessed man with a healthy sense of detachment from your bank account and someone writes you a cheque for tens of millions of dollars you probably behave as if you have won a sweepstake, kicking your feet in the air and laughing yourself to sleep at night at the miracle of your good fortune. But if your sense of self-worth is morbidly wrapped up in your financial success you probably believe you deserve everything you get. You take it as a reflection of something grand inside you. You acquire gravitas,

But if Crake wanted her to stay longer on any given night, do it again maybe, she'd make some excuse—jet lag, a headache, something plausible. Her inventions were seamless, she was the best poker-faced liar in the world, so there would be a kiss goodbye for stupid Crake, a smile, a wave, a closed door, and the next minute there she would be, with Jimmy.

I don’t do favors. I accumulate debts. —Ancient Sicilian motto

When asked the key to his success, he said, “In the land of the blind the one-eyed man is king.

Fear and, to a lesser extent, greed are what make money move.

Meriwether was the King of the Game, the Liar’s Poker champion of the Salomon Brothers’ trading floor. On

Gutfreund (pronounced Good friend) liked to sneak up from behind and surprise you. This was fun for him but not for you.

In the stock market the more elaborate and abstruse the mathematics the more uncertain and speculative the conclusion we draw therefrom….

any player unaware of the fool in the market probably is the fool in the market.

My job became nothing more than showing up every morning to do what I had already done, the reward for which was simply more of the same. I disliked the lack of adventure.

He who makes a beast of himself gets rid of the pain of being a man.

when I ran mortgages, I religiously took people from the back office. At first I did it for moral reasons. But it worked. They appreciated it. They didn’t feel like the world owed them a living. They were more loyal.

The questions a Liar’s Poker player asks himself are, up to a point, the same questions a bond trader asks himself. Is this a smart risk? Do I feel lucky? How cunning is my opponent? Does he have any idea what he’s doing, and if not, how do I exploit his ignorance? If he bids high, is he bluffing, or does he actually hold a strong hand? Is he trying to induce me to make a foolish bid, or does he actually have four of a kind himself? Each player seeks weakness, predictability and pattern in the others and seeks to avoid it in himself.

The markets in the long run are no doubt driven by fundamental economic laws—if the United States runs a persistent trade deficit, the dollar will eventually plummet—but in the short run money flows less rationally. Fear and, to a lesser extent, greed are what make money move.

There is a magic moment, during which a man has surrendered a treasure, and during which the man who is about to receive it has not yet done so. An alert lawyer [read bond trader] will make that moment his own, possessing the treasure for a magic microsecond, taking a little of it, passing it on.

Wall Street makes its best producers into managers. The reward for being a good producer is to be made a manager. The best producers are cutthroat, competitive, and often neurotic and paranoid. You turn those people into managers, and they go after each other. They no longer have the outlet for their instincts that producing gave them. They usually aren’t well suited to be managers. Half of them get thrown out because they are bad. Another quarter get muscled out because of politics. The guys left behind are just the most ruthless of the bunch. That’s why there are cycles on Wall Street—why Salomon Brothers is getting crunched now—because the ruthless people are bad for the business but can only be washed out by proven failure.

He said they would be mad at me. He said they would hate me.’ Tina saw her hand on the poker again. Some killing was good. ‘Lockie, look at me.’ He turned away from the yellow fields and his eyes met hers. ‘I’ve told you before and you have to believe me: everything the uniform said was a lie. Everything. He lied about taking you to your parents and he lied about them not looking for you and he lied about them being angry with you. Whatever he did or you did he made you do it. He made you do it and he was bad and a liar and you are a good kid.’ ‘He said they wouldn’t love me ever again.’ Tina looked out of the window. The thing about being a kid was that you had to hear the good stuff a lot before you believed it. You only had to hear the bad shit once before it began to eat away at you.

Still, the equity department seemed happy, though not until I had spent some time with them did I begin to fathom why. They felt less pressure than bond traders and bond salesmen. They had accepted their lot and like the peasants in a Breughel pastoral scene were content to celebrate the simple pleasures of life. A house on the Jersey shore rather than in the Hamptons. Skiing in Vermont rather than Zermatt.

The gist of Laszlo’s pitch for the equity department was this question: When you turn on your television at six-thirty and Dan Rather tells you that today the market went up twenty-four points, what market do you think he means? “What!” Laszlo would say. “You think he’s talking about Grade A industrial bonds? Ha! He’s talking about the stock market.” In other words, if you joined the equity department, your mother would know what you did for a living.

Most traders divulge whether they are making or losing money by the way they speak or move. They are either overly easy or overly tense. With Meriwether you could never, ever, tell. He wore the same blank half-tense expression when he won as he did when he lost. He had, I think, a profound ability to control the two emotions that commonly destroy traders (fear and greed) and it made him as noble as a man who pursues his self-interest so fiercely can be.

The typical Savings and Loan president was a leader in a tiny community. He was the sort of fellow who sponsored a float in the town parade; that said it all, didn’t it? He wore polyester suits, made a five-figure income, and worked one-figure hours. He belonged to the Lions or Rotary Club, and also to a less formal group known within the “thrift”* industry as the 3–6–3 Club: he borrowed money at 3 per cent, lent money at 6 per cent, and arrived on the golf course by 3 in the afternoon. *

Forty percent of the thirteen hundred members of Yale’s graduating class of 1986 applied to one investment bank, First Boston, alone. There was, I think, a sense of safety in the numbers. The larger the number of people involved, the easier it was for them to delude themselves that what they were doing must be smart. The first thing you learn on the trading floor is that when large numbers of people are after the same commodity, be it a stock, a bond, or a job, the commodity quickly becomes overvalued. Unfortunately, at the time, I had never seen a trading floor. The

First, when all investors were doing the same thing, he would actively seek to do the opposite. The word stockbrokers use for this approach is contrarian. Everyone wants to be one, but no one is, for the sad reason that most investors are scared of looking foolish. Investors do not fear losing money as much as they fear solitude, by which I mean taking risks that others avoid. When they are caught losing money alone, they have no excuse for their mistake, and most investors, like most people, need excuses. They are, strangely enough, happy to stand on the edge of a precipice as long as they are joined by a few thousand others. But when a market is widely regarded to be in a bad way, even if the problems are illusory, many investors get out. A good example of this was the crisis at the U.S. Farm Credit Corporation. It looked for a moment as if Farm Credit might go bankrupt. Investors stampeded out of Farm Credit bonds because having been warned of the possibility of accident, they couldn’t be seen in the vicinity without endangering their reputations. In an age when failure isn’t allowed, when the U.S. government had rescued firms as remote from the national interest as Chrysler and the Continental Illinois Bank, there was no chance the government would allow the Farm Credit bank to default. The thought of not bailing out an eighty-billion-dollar institution that lent money to America’s distressed farmers was absurd. Institutional investors knew this. That is the point. The people selling Farm Credit bonds for less than they were worth weren’t necessarily stupid. They simply could not be seen holding them. Since Alexander wasn’t constrained by appearances, he sought to exploit people who were.

My father's generation grew up with certain beliefs. One of those beliefs is that the amount of money one earns is a rough guide to one's contribution to the welfare and prosperity of our society. I grew up unusually close to my father. Each evening I would plop into a chair near him, sweaty from a game of baseball in the front yard, and listen to him explain why such and such was true and such and such was not. One thing that was almost always true was that people who made a lot of money were neat. Horatio Alger and all that. It took watching his son being paid 225 grand at the age of twenty-seven, after two years on the job, to shake his faith in money. He has only recently recovered from the shock. I haven't. When you sit, as I did, at the center of what has been possibly the most absurd money game ever and benefit out of all proportion to your value to society (as much as I'd like to think I got only what I deserved, I don't), when hundreds of equally undeserving people around you are all raking it in faster than they can count it, what happens to the money belief? Well, that depends. For some, good fortune simply reinforces the belief. They take the funny money seriously, as evidence that they are worthy citizens of the Republic. It becomes their guiding assumption-for it couldn't possibly be clearly thought out-that a talent for making money come out of a telephone is a reflection of merit on a grander scale. It is tempting to believe that people who think this way eventually suffer their comeuppance. They don't. They just get richer. I'm sure most of them die fat and happy. For me, however, the belief in the meaning of making dollars crumbled; the proposition that the more money you earn, the better the life you are leading was refuted by too much hard evidence to the contrary. And without that belief, I lost the need to make huge sums of money. The funny thing is that I was largely unaware how heavily influenced I was by the money belief until it had vanished. It is a small piece of education, but still the most useful thing I picked up at Salomon Brothers. Almost everything else I learned I left behind. I became fairly handy with a few hundred million dollars, but I'm still lost when I have to decide what to do with a few thousand. I learned humility briefly in the training program but forgot it as soon as I was given a chance. And I learned that people can be corrupted by organizations, but since I remain willing to join organizations and even to be corrupted by them (mildly, please), I'm not sure what practical benefit will come from this lesson.

As in Rorschach ink blots, an unlikely formation, such as a human head and shoulders, made itself privately known to the viewer.

For people to accept the yoke, they must believe they have no choice.

Deception seems to be something of a forte of mine, and I often wonder whether poker has led me to hide my true self, or whether I am a natural liar.

More praise for Liar’s Poker Selected as one of BusinessWeek’s

In the ensuing anarchy the bad drove out the good, the big drove out the small, and the brawn drove out the brains. There was a single trait common to denizens of the back row, though I doubt it ever occurred to anyone: They sensed that they needed to shed whatever refinements of personality and intellect they had brought with them to Salomon Brothers. This wasn’t a conscious act, more a reflex. They were the victims of the myth, especially popular at Salomon Brothers, that a trader is a savage, and a great trader a great savage. This wasn’t exactly correct. The trading floor held evidence to that effect. But it also held evidence to the contrary. People believed whatever they wanted to.

Analysts photocopied, proofread, and assembled breathtakingly dull securities documents for ninety and more hours a week. If they did this particularly well, analysts were thought well of by their bosses. This was a dubious

don’t do favors. I accumulate debts. —Ancient Sicilian motto

But as revenues subsided, costs all of a sudden mattered, too.

It was widely believed that a small, bald man in a grubby room in Moscow started all rumors to wreak havoc on our Western market-based economy.

I recall that one of the first investment bankers I met taught me a poem. God gave you eyes, plagiarize.

They basically assume that anything that enables them to get rich must also be good for the world.

He may have been right, but that’s not why we didn’t leap into junk bonds. We didn’t underwrite junk bonds because our senior management didn’t understand them, and in the midst of the civil war on the forty-first floor, no one had the time or the energy to learn.

The New York Times, in other words, affected policy at Salomon Brothers.

For me, however, the belief in the meaning of making dollars crumbled; the proposition that the more money you earn, the better the life you are leading was refuted by too much hard evidence to the contrary. And without that belief, I lost the need to make huge sums of money.

Alexander insisted at our farewell dinner that I was making a great move. The best decisions he has made in his life, he said, were completely unexpected, the ones that cut against convention. Then he went even further. He said that every decision he has forced himself to make because it was unexpected has been a good one. It was refreshing to hear a case for unpredictability in this age of careful career planning. It would be nice if it were true.

Bond people pose the same problem to a cultural anthropologist as a non-literate tribe deep in the Amazon. In

After Volcker’s speech, bonds became objects of speculation, a means of creating wealth rather than merely storing it. Overnight the bond market was transformed from a backwater into a casino.

I’m now convinced that the worst thing a man can do with a telephone, without breaking the law, is to call someone he doesn’t know and try to sell that person something he doesn’t want.

The training program wasn’t a survival course, but sometimes a person came through who put the horrors of 41 into perspective.

if a department allowed someone to leave, it was for the good reason that it wanted to get rid of him; when you took people from other departments, you got only the ones you didn’t want.

we knew that in general the quality of treatment we received in the training class varied inversely with the desirability of the job held by the speaker. In this there was a lesson: To get the best job, you had to weather the most abuse.

So, I applied to the Harvard Business School and got in. I remember reading all these business books like Barbarians at the Gate, Liar's Poker, and thinking ‘what the hell is this?’ I enjoyed it. Business school was interesting. I learned a lot of stuff.

My Lehman interview was representative not just of my own experience, but of thousands of interviews conducted by a dozen investment banks on several dozen college campuses from about 1981 onwards.

Wall Street paid the most for what I could do, which was nothing.